Latin American Regional Conference 2018 fosters open innovation and collaboration in the region
- The community gathered to discuss ‘seizing the opportunity’ at the JW Marriott Marquis in Miami
- Over 500 delegates from around the globe signed up for the event
- Collaboration, innovation, cross-border payments, financial inclusion, cybersecurity, and risk management emerged as key themes throughout the two-day conference
- During the conference, Banco Bradesco, one of the largest banks in the region, became the first in Brazil to join SWIFT’s global payment innovation (gpi) service.
More than 500 business leaders and industry experts attended SWIFT’s Latin American Regional Conference 5-6 June in Miami– a city acclaimed as the financial and innovation hub for Latin America & the Caribbean.
Latin American Regional Conference - 2018 Highlights
Over the course of two days, the conference explored how financial institutions work together to strengthen and benefit the whole community. Many of these discussions included a look at how new market entrants and developing technologies are dramatically changing the financial landscape in the region. Delegates heard firsthand from industry experts, and gained insight on best practices for the community to collaborate and create an actionable agenda to harness opportunities for innovation and transformation.
Opening the event, Juan Martinez, Managing Director, Latin America & the Caribbean at SWIFT noted how technologies are a tool for providing more and better services for customers. He cited areas such as real-time payments, open APIs, cyber security and the rise of fintechs, as key issues and opportunities, both in Latin America and around the world.
Community collaboration leads to transformation
The importance of collaboration between banks and fintechs was highlighted on a number of occasions throughout LARC.
Marisol Argueta de Barillas, Head of Regional Strategies, Latin America, World Economic Forum, who delivered the keynote speech, said labor markets in Latin America face challenges due to technological disruption. Proof of this, is the fourth industrial revolution that is suggesting that companies change their structures and business models to show their competitiveness. She noted that many financial institutions are now looking for new technologies to help drive financial inclusion. Technology, such as artificial intelligence, can help banks to monetize the data they can capture; and it also supports the integration of new companies into the financial system.
During the opening panel, Transformation through collaboration on day 1, Diego Herrera, Senior Specialist in the Connectivity, Markets and Finance Division at Inter-American Development Bank said that his institution has worked on bringing together a variety of partners, from regulators to fintechs, banks and SWIFT, so that everyone is on the same page for collaboration. He noted that, while fintechs are well known as the disruptors, it is important to remember that innovation is also coming from 'traditional' banks.
Steven Puig, CEO of Banco BHD Leon agreed with this point, adding that his institution is engaged in the digital transformation. He noted that his bank has a history of collaborating with others in order to develop customer-centric solutions, and added that this is the approach they plan to take forward.
Providing a fintech perspective, Guillermo Acuña, Co-Founder & CEO of Mexico at Cumplo explained that his company is always looking for collaborative opportunities. He said that this approach is one that can benefit the financial community, as well as the region beyond that. Acuña also noted that, while banks in the past had a habit of looking at Cumplo as competition, APIs are offering a way for fintechs to join the banking system. He says that in the final analysis, everyone is part of the same ecosystem.
One challenge for banks has been their legacy systems, which might not be as agile as the non-bank vendors they are trying to partner with. Marcela Zetina, Head of Open Innovation with BBVA Bancomer pointed out that, while technology companies originated to develop solutions for everyone, banking infrastructures are sometimes complicated due to M&A processes over the years. This issue can be overcome through greater collaboration. She also identified the need for there to be a change in mind set across the organisation. She noted that innovators in banks need to change the hearts and minds of the board in order to get support for change from the top down.
New technologies are also playing a part in the transformation of financial services in the region. A poll question asked the audience which technologies will have the biggest impact on financial services. AI finished on top with 53% of the vote, ahead of blockchain (35%), Big Data (9%), and the Internet of Things (4%).
Amol Selot, Head of Financial Services Consulting, Digital, at Fujitsu America said, during his presentation on digital transformation, that the adoption of new technologies is meant to better serve the customer base of banks, which are evolving at a rapid rate. He encouraged banks not to build a digital bank but instead to build a bank for those raised digitally. He ended by advising banks to become their ‘customer’s lifestyle partner’ by getting a better grasp on the vast swathes of data available to them.
During the API session, Rene Schuurman, Global Product Manager for Channel Services at Citi Treasury and Trade Solutions commented that customers want bank agnostic APIs. He said a realistic time frame of 18 months to 2 years is what the industry should need to create a standard for APIs. Schuurman added that this should not stop people from using APIs, but it was important to bear in mind that some APIs may not be open APIs just yet.
Juan Martinez from SWIFT added that regulations such as PSD2 in Europe and Open Banking in the UK are forcing banks to open up their back ends to developers. However, he cautioned that these need to be standardised. He shared that SWIFT is working on the standardisation and on the security management side. Data protection is a critical element as APIs sit between numerous front and back ends.
SWIFTLab: Keeping up with technology trends
SWIFT’s Alvaro Acevedo, Platform and Technology Expert and Oleg Garcia, Senior Solutions Architect, shared recent developments on three major areas: API, Distributed Ledger (DLT) and AI. They will showcase how SWIFT is utilizing these technologies to enhance its products and transform its service offerings to benefit the community.
The potential for APIs in SWIFT is endless; for example it can be deployed across content such as KYC, business intelligence, naming screening, control payment, MyStandards, and gpi to name a few. Moving forward, SWIFT wants to explore more use cases, as well as move towards a SWIFT DLT platform. Sanctions screening is a great example of where AI and machine learning can offer benefits. SWIFT currently uses AI to detect abnormal traffic and for deeper analysis, but plans to explore its use in different areas of the business.
Innovation in cross-border payments
During the ted- talk styled cross-border payments innovation session, panellists shared their insights on how banks are responding to customer demands for speed, visibility, transparency and rich data; and what more can be done in the region to drive change in the payments space.
Martin Barrios, Managing Director, Global Transaction Services Head at Bank of America Merrill Lynch Mexico, highlighted that banks need to be agile in order to service the challenges the industry is facing in the areas of faster payments, regulation, and cybersecurity.
Dino Sani Jr, Managing Director & Head of Treasury Services Latin America, BNY Mellon, agrees that the market wants predictability, and discussed the different technologies that are available to bridge this gap. He emphasized that SWIFT gpi- is a fast, controlled and regulated global initiative that is available now. “The technology is here, but the ecosystem has to be there too”, he said to delegates.
The cyber challenge continues
Cyber resilience was a key theme throughout the conference. In his opening remarks, Juan Martinez, reminded delegates that cyber security is a key issue for all in the community, commenting that investment in cyber security should be a top priority for banks.
Cyber security is top of mind for many financial institutions, and as such it was an important area of discussion in Miami.
Security is important, but it is not why companies are in business, noted Kevin Johnson, founder and CEO of Secure Ideas. Security is a cost, which is where the problem is. Johnson said that user-focused attacks through a fake email, website or Wi-Fi network are still considered prevalent forms of cyber-attacks, and that the only way to prevent this type of attack is through education.
Nelcy Martinez Padilla, Director of Information Security and Cybersecurity at the Colombian Stock Exchange shared an experience that supported the call for education to help tackle the cyber threat. She explained how three weeks previously in Colombia there was a national crisis drill, and one of the main outcomes was how obvious the lack of knowledge about cyber threats is in senior management of companies. Belisario Contreras, Cyber Security Program Manager (Inter-American Committee against Terrorism) at the Organization of American States, added that the lack of awareness creates a major gap that can be exploited by malevolent external forces. Tackling the awareness issue can bring results.
The conference closed with Diana Kelley, Cybersecurity Field CTO at Microsoft sharing three big drivers for organisations as they try to tackle cyber security. The first was to keep it simple - reduce the number of solution vendors and alleviate friction between security and productivity. Secondly, be smart - speed up detection and response with automation and machine learning. Thirdly, focus on being integrated - built-in security means less to deploy and fewer agents to manage. Don't be scared, but be prepared, Kelley advised.